Nearly every employer who has one or more employees is required to have workers’ compensation insurance. Utilizing workers’ compensation best practices helps employers keep premium costs down while helping them build a strong culture where their employees feel valued and safe. Best practices start with smart hiring and end with excellent claims management.
What Workers’ Compensation Best Practices Are
Workers’ compensation best practices are what employers do to reduce the number of workplace injuries, minimize the extent of any injuries that do occur and help injured workers get back to work as soon as possible. Implementing workers’ compensation best practices doesn’t have to be difficult, but it does require planning and coordination.
Here are 12 workers’ compensation best practices you can implement easily.
1. Don’t Let Claims Happen in the First Place
No company can prevent every claim, but when an employer has the right safety protocols in place, even the risk for the most common work injuries is reduced greatly. Part of the workers’ compensation premium is based on claims history, represented by a factor called the experience modification rate (EMR). When you don’t have claims or your claim history is less than the industry standard, your EMR goes down.
When new employers first start workers’ compensation policies, their EMRs are set at 1.0 but can go up or down as time passes. Claims may cause your EMR to go up, and that increases your premium. However, the fewer claims you file compared to similar businesses in your industry, the more likely your EMR can dip below one. This typically results in a premium reduction.
2. Hire the Right People
Hiring the right people greatly reduces the likelihood of common workplace injuries. Human resources (HR) departments can use various tools to determine which candidates are likely to create a higher risk for workers’ compensation injuries, including drug testing, background checks, and social media reviews, along with situational interview questions.
Red flags in the hiring process include positive drug tests; bad driving records, including driving under the influence; and an overall complacent attitude toward personal safety. For example, a driver’s license check may reveal that the delivery driver you are planning to hire is irresponsible on the road. Knowing this information before you extend an offer not only reduces the chance of a workers’ comp claim, but it can also have a positive impact on your commercial auto rates commercial auto insurance rates.
“To protect yourself from workers’ comp claims, it’s helpful to do drug screening of your employees. In fact, I often post the phrase ‘must be able to pass a drug test’ in the job posting to reduce the chance that drug-addicted employees will apply to the role in the first place. Another solid HR practice is to do a mandatory drug screen anytime a workplace accident takes place.”
— Laura Handrick, Workforce Analyst, SPHR, Fit Small Business
3. Create Written Safety Practices
Once you have a comprehensive safety policy, distribute it to all employees, and review it in a meeting. Then, you can have every employee sign an acknowledgment of the rules. By having a clearly written manual, employers set the right expectations for safe behavior.
A written safety manual sets rules for employees to follow and can be legal protection in a workers’ compensation claim or in actions taken against an employee who ignores safety practices, such as disciplinary action or termination. Written policies followed by consistent documentation of violations give employers greater protection when they let go of employees who refuse to follow workers’ compensation safety practices.
4. Make Safety a Priority
Employers can build a company culture that puts safety first by setting a good example. Not only does this reduce workplace injuries, but it also inspires employees to speak up with innovative ideas regarding risk management. Sometimes, an employer might not realize the risk involved at various levels of the company. In many cases, only the person doing the work knows the real risk.
When workplace safety is a priority, everyone becomes a partner in keeping each other safe and reducing injuries. Employees should be encouraged to report situations where an injury was barely averted. This helps employers understand potential gaps in their safety protocols.
5. Train and Educate Regularly
Hold regular training to review overall safety practices and specific workers’ compensation best practices. This training should be done at least annually, but regular short meetings covering specific best practices help employees see the importance of injury prevention.
Some methods that can help employees better understand workers’ compensation best practices include:
- Hypothetical scenarios
- Actual claim debriefing
Don’t assume people remember what the rules are or that common sense will always win. The more interactive training is, the better best practices may stick in your workers’ heads.
6. Establish Peer Review
When small business owners make safety a priority and have clearly set expectations through policies and training, the next step in workers’ compensation insurance best practices is to institute peer review. Peer reviews encourage co-workers to confidentially report others who ignore safety protocols and help employers find areas where procedures may be compromised.
For example, a residential care home manager might not be aware of an employee smoking cigarettes in an area where oxygen is in use. This practice creates danger for other employees, residents, and the business as a whole. Giving employees the ability to report safety infractions confidentially allows employers to take action to prevent major catastrophes.
7. Get the Right Insurance Policy
If you have employees, you most likely need workers’ compensation insurance. However, not all insurance carriers are the same, nor do all policies cover the same things. Getting a workers’ comp policy that covers your state’s minimum requirements may not be enough for your risks. Additionally, the right insurance carrier can help small business owners evaluate risk, develop the right safety plans, and help mitigate risk, saving everyone money.
Every workers’ comp insurance carrier has preferences for certain professions. When an insurance carrier has a strong preference for a specific industry, it means they can often price policies more competitively. As a result, comparing offers from more than one insurance carrier helps you find suitable coverage at an affordable price. An insurance broker such as CoverWallet can help you get multiple quotes to compare in just minutes.
8. Process Workers’ Comp Claims Quickly
Quick reporting and efficient workers’ comp claim processes help everyone. First, most states require employers report workers’ compensation claims immediately, often within days of the incident. However, reporting claims quickly isn’t just in line with rules and regulations. It’s also the first step toward getting injured employees the medical attention necessary to keep injuries from worsening and on the path to rehabilitation faster.
Employers should keep records of all incidents, even minor ones that require basic first aid, such as scrapes and cuts. If a minor injury such as an abrasion escalates into a serious infection, the incident can elevate into a formal claim quickly. The goal is to reduce time off of work and keep claims costs down in the long run.
9. Implement Return-to-Work Programs
Getting employees back to work quickly after an accident isn’t just important from a claims cost standpoint: it is also important for company morale, especially if workers suffer more serious injuries. Return-to-work programs help make this happen by focusing on rehabilitation and vocational training that allows injured workers to take on limited duties as soon as possible. A return-to-work program might include putting someone on desk duty before returning to physical activities and then limiting activities with weight restrictions or duration.
Return-to-work programs are a workers’ compensation claims management best practice because they reduce the cost of claims. Perhaps more importantly, they can help prevent the onset of depression employees sometimes suffer while dealing with injuries.
10. Investigate Claims
Small business owners should always look at the circumstances that result in a workers’ compensation claim for two reasons. First, it helps employers discover additional risks and develop strategies to reduce risk further. Moreover, investigating claims helps employers identify potential fraud from employees making workers’ compensation claims for injuries that either don’t exist or didn’t happen while on the job.
Red flags for fraudulent workers’ comp claims include:
- Claims that occur just after a vacation
- Injuries that have no witnesses
- Discrepancies in the incident report and medical evaluation
Insurance carriers and the state’s department of insurance have investigation units that specialize in identifying fraud. Small business owners should report any concerns over fraud to their insurance carrier for investigation.
11. Tune in to Legal Updates
Workers’ compensation and human resources rules and regulations can change with state and federal laws. Failing to have the right protection in place can mean stiff fines and even criminal charges. Unfortunately, ignorance of these requirements is not a defense, so make it part of your small business workers’ compensation insurance best practices to determine if new safety regulations apply to your business.
If you are concerned about staying abreast of legal updates, talk to your insurance agent. Many workers’ compensation insurance carriers consider themselves partners in risk mitigation and safety programs with small business owners because complying with state laws and reducing claims is in everyone’s best interest. Your insurance carrier is a great resource when it comes to adapting to new regulations in the workers’ compensation risk management front.
12. Build an Employee Health Program
Encouraging employees to live a more active lifestyle outside of work is an effective workers’ compensation insurance best practice. When employees maintain healthy weights and active lifestyles, they reduce their chances of getting injured on the job.
An employee health program could be as simple as encouraging weekend hiking or bike rides but can also be as comprehensive as offering gym memberships or optional at-work exercise programs.
Importance of Workers’ Compensation Claims Management
There are four primary areas for workers’ compensation claims management best practices, and each can help business owners to minimize trouble in the claims process. The National Safety Council found that the average workers’ comp claim in 2017 was $40,051. Injuries resulting from a work-related auto accident increased average costs to $78,293.
Workers’ compensation claims best practices is important in:
- Claims settlement: Confirming that paperwork is filed, care is provided, and payments are made timely and correctly until the file is closed makes the claims process easier for everyone.
- Cost management: Efficient claims processing often results in faster rehabilitation of injured employees, resulting in faster closure of claims and a reduction in overall costs to insurers and small business owners.
- Fraud detection: Systematic protocols help you identify and report fraud faster, reducing fraud’s overall impact on costs, work disruption, and company morale.
- Litigation avoidance: Effective communication and claims management reduce the chances of employees suing employers. In most states, employees waive rights to a lawsuit when they file a claim but can sue in certain circumstances.
Insurance carriers understand that claims can and do happen. However, they prefer employers who can manage claims efficiently and offer many aids to help. A company that doesn’t manage claims could have their policy canceled if an insurance carrier feels the employer is not doing enough to prevent workplace injuries or help employees get back to work quickly. Policy adjustments happen after an annual audit.
Workers’ Compensation Claims Management & Employee Performance
Workplace injuries affect more than just the employee who gets hurt. When an employee is unable to perform his normal job functions, other employees need to fill the gap, or the employer needs to find temporary help that might not be as efficient at the injured workers. Ultimately, the entire team suffers as everyone needs to assume more responsibility to pick up the slack.
Aside from assuming more work, other employees may also feel added stress after a serious workplace accident. When employees see a colleague get hurt, they may become fearful in their own job duties and worry if safety protocols protect them. Co-worker concern can become a major factor after a serious injury, especially when employers don’t have set protocols and efficient systems to deal with claims.
Ultimately, workplace injuries can happen, but workers’ compensation claims management best practices establish protocols to reduce the overall effect on the performance of someone being out injured.
Workers’ Compensation Best Practices Frequently Asked Questions (FAQs)
Workers’ compensation insurance best practices encompass many aspects of a business, including operations, HR, and insurance budgets. Below are some of the most common questions that arise with best practices. If you still have a question, feel free to leave a comment below or visit our small business forum so that we can help find the best answer possible.
Can an employee choose not to file a workers’ compensation claim?
Employees have the option not to file workers’ compensation claims, but employers should still thoroughly document any employee injury no matter small it might be. Most states have a two-year statute of limitations for employees to file a claim. Employees often waive rights for a lawsuit if they file a workers’ comp claim.
What employers are required to provide workers’ compensation insurance?
Most states require any employee with at least one full- or part-time employee to have workers’ compensation insurance in force prior to the first day of work. Failure to get workers’ comp insurance could result in penalties and even criminal prosecution in some states. Check with your states’ workers’ compensation board for your state’s specific requirements.
What are the four types of workers’ compensation benefits?
Most workers’ compensation benefits fall into one of four categories: medical benefits, lost wages, vocational retraining, and funeral or burial expenses. All benefits are defined by state law, and the amount of coverage is contingent on the injury, the employee’s average weekly wage, and state limits.
Workers’ compensation insurance best practices exist for businesses to help reduce the number of claims, thus keeping costs down for everyone involved and helping the employee and the business recover quickly. Evaluate your business risk needs and resources with your insurance agent to determine the easiest ways to implement risk management strategies.
If you are unsure where to start or feel that risk management just isn’t something you can tackle alone, your insurance agent is there to help. The Hartford offers more than just comprehensive workers’ compensation policies. It has specialists who understand your business based on industry and work class and can help you identify ways to reduce risk, help employees, and keep premiums as low as possible. Get a free, no-obligation quote to see what The Hartford can do for you.